5 Budgeting Tips to Save Cash

Posted on July 30th, 2018

Saving money is a difficult commitment to make, but it provides benefits in the long run. Life throws unpredictable events at us, and preparing our budgets to account for accidents or emergencies grants peace of mind. Saving is also one way to hold off on wanton spending that drains accounts rapidly. The following tips to save money can inspire balance in your daily financial habits.

Stick to a 30 Percent or Less Rule

It’s hard to save money without setting up a cap on your spending. When payday rolls around and there are new products or items grabbing our attention, it’s incredibly difficult. We recommend setting a limit of 30 percent of your paycheck to spend on entertainment and leisure. This reserves 70 percent use for essentials. Use 30 percent as a starting point and decrease the limit to save even more money as you become more confident in your saving strategy.

Establish Financial Goals

Nothing helps curtail personal spending and establish a direction more than creating a strategy. By writing down financial goals, such as paying off your car by a certain date, you lay a foundation for future success. Knowing where your money flows is liberating and strengthens resolve in saying no to frivolous purchases.

Manage Personal Cash Flow Daily

Dedicating one minute a day to looking over your bank account makes you aware of where you spend the most. This also promotes comfortability in managing one’s finances. Get cash out daily or weekly to keep to a specific spending amount, which is a research-proven technique that keeps your cash account stable. When swiping cards is the go-to, the convenience causes individuals to spend much more.

Shop Realistically

When new products appear on the market, whether a new gadget or guilty pleasure, it is important to hold back the impulse to buy it. Impulsive shopping tends to influence purchasing habits and tricks us into buying items we don’t need.

Pay off Larger Debts First

When paying off credit card debt or loans, it’s beneficial to chip away at a loan with a higher interest rate. If you wait to pay, amounts owed increases exponentially. Although paying off smaller amounts of debt with smaller interest rates seems more manageable, they won’t cost as much as high-interest debt. By hedging larger loans and limiting the traction their high-interest gains, the debt is more manageable over time.

Ask The CPA: 5 Things Your Accountant Wants You to Know Before You Start a New Business

Posted on June 8th, 2018

It’s Monday morning and you’re on your way to begin yet another week at your boring day job. You’ve considered starting a business for a very long time. You’ve developed a business plan and have even made a few “sales”. You believe that you have the perfect product, service, or niche idea that you’re sure is going to be the next best thing but you’re confused as to how to get started. Or maybe you’ve gotten started but are unsure of whether you’re on the right track. Should you hire an accountant? Should you incorporate as a separate legal entity? What about taxes? After years of experience working with small business owners and being a small business owner myself I’ve come up with the top 5 things you should consider when planning to start a new business.

#1: To create a separate legal entity or not to create a separate legal entity… that is the question?

One of the biggest mistakes that small business owners make is failing to establish their business as a separate legal entity. The creation of a separate legal entity is paramount to ensuring that the business is able to sustain itself separately from the owners. It’s also a surefire way to reduce the personal risks to the owner associated with any legal action taken against the business. Depending upon the type of organization that is chosen, the owner will not be personally responsible for the liabilities of the organization. The business is able to establish its own assets and incur its own liabilities separate from the owners. In laymen’s terms, the owners’ personal assets are not at risk if the business is sued or files for bankruptcy. The selection of a separate legal entity also has an impact on the taxes for both the business and the owners. There are several entities that one can choose from and I would advise that before you select an entity that you ensure that the legal form that you choose is appropriate for the business that you are establishing. You should consult with an accountant or legal counsel to determine which entity type is best for you. You can also go to your states website to review the rules for establishing a legal entity in your jurisdiction.

#2: Thou shalt not commingle assets (business and personal)

Whether you choose a separate legal entity or not, I always advise small business owners to keep business and personal records separate. This means that all business revenues and expenses should be transacted on in one account and personal expenses of the business owner should be transacted in a separate account. This is important because at tax time your business expenses will be used to justify certain write-offs associated with the business. If you are unable to determine which expenses are business versus personal it’s quite possible that you will not be eligible to deduct any expenses. Also, in the event of an audit by the IRS expenses that are thought to be personal in nature will be disallowed resulting in potential fines, penalties, interest and additional taxes due. Aside from the tax implications, the separation of business and personal expenses will allow the creation of meaningful financial reports which will allow you to better understand how your business is performing.

#3: Don’t Be Afraid to Outsource

At the onset of starting a new business many small business owners choose to “do it all.” This is totally understandable considering that in the early stages of a small business access to “capital” is usually limited. While I am proponent of doing it yourself when it makes sense, I always advise my clients to outsource when appropriate. So for example, if you know that you’re not skilled in accounting and don’t understand how to choose a method of accounting, accounting software, MS Excel, debits or credits, then it would make sense to hire an accountant . There are plenty of low cost options for a wide array of business support services which can be researched online. You can also research “how to” videos via YouTube and other online sources. The risk of doing it all is that key functions will be done incorrectly and that your business will be adversely affected. You will have also spent precious time struggling that could’ve been used to improve your products and services.

#4: Licenses, Permits and Insurance

As part of the establishment of your business you should confirm any licenses that are required at the federal, state and local level. Many states require sales tax licenses and other licenses and permits for businesses that sell retail goods and services. There are also vocational-related licenses and environmental requirements that must be considered. If you have employees you will need to ensure that you have a process to ensure that you are following federal, state and local laws regarding payroll taxes and employment law.

Insurance is also very important to the maintenance of a successful business. Determine which business property requires insurance and contact a broker for an insurance quote. Obtain liability insurance on vehicles used in your business, including personal cars of employees used for business. Obtain liability insurance for your premises if customers or clients will be visiting. Obtain product liability insurance if you will manufacture hazardous products. If you will be working from your home, make sure your homeowner’s insurance covers damage to or theft of your business assets as well as liability for business-related injuries. Consider health & disability insurance for yourself and your employees.

#5: DO NOT ignore taxes and file tax returns annually

Every year without fail I meet a new client who is frantic because they’ve received a letter from the IRS or they’re afraid that the IRS will be reaching out to them due to years of un-filed tax returns. I can’t stress enough the importance of filing tax returns every year, regardless of whether you think you’re going to owe. Failing to file tax returns puts your business at risk and can result in hefty fines, penalties, interest and additional taxes due. In addition to end of the year tax returns, small business owners have to consider additional taxes that must be paid throughout the year. For example, payroll taxes, quarterly taxes, sales taxes, and other state/local taxes, etc. You should research your state and local tax authority website for required tax returns for business owners in your area. As I stated above it’s important to know when to outsource. So if you don’t understand taxes hire an accountant/tax professional or visit the IRS website for low-cost or free options for tax preparation services. Ideally, the person that you’re using an as accountant should be able to assist you in the gathering of key financial records that will be used to prepare your tax returns.

There is so much to consider when starting a new business. By no means should the above note be construed as an exhaustive list. Your best bet is to do your due diligence and ensure that you’re sufficiently armed with the knowledge to meet the challenge!

If you’d like to further discuss the contents of this article or have questions regarding our service offerings please feel free to let us know (

Melantha K. Paige, CPA | 01/11/2017


Ask The CPA: OMG! The IRS Just Sent Me A Threatening Message!

Posted on June 8th, 2018

It’s the beginning of another tax season and some things are just to be expected. There will be clients who won’t have all of their paper work available. There will be clients who choose to use DIY tax software in order to save money.  And without a doubt I am destined to receive a phone call from one or more frantic taxpayers who have received a threatening communication from who they believe to be the Internal Revenue Service.  These types of tax scams have been occurring for over a decade and have netted the scammers millions of dollars.  One would assume that the many news stories and social media posts on the topic would be enough to educate the public but every year without fail someone calls me because they’re afraid that they’re going to be arrested by the IRS.

So after years of calming the fears of many law abiding tax payers I’ve decided to dedicate a blog posting to the topic of IRS impersonation scams.  My hope is that my readers will share this blog post far and wide and that the general public will begin discussing this topic around the proverbial water cooler.

The ABC’s of the Typical IRS Impersonation Scam

IRS impersonation scams have been around for over a decade and although they have evolved over the years the basic playbook remains the same.  Usually the taxpayer receives an email, telephone call or text message from someone who claims to be an agent of the IRS. The taxpayer is then informed that there is an unaddressed tax liability which must be paid immediately or else the taxpayer will be subject to an IRS enforcement action.

Individuals who have fallen prey to these scams have been forced to send payment often via prepaid credit cards or by giving access to their financial institutions.  The scammers use intimidation, threats of jail and lawsuits as well as the general fear of the IRS to lure their victims into paying thousands of dollars.  The scammers are often overseas but many also reside in the United States. By the time the taxpayer realizes that they’ve been duped it’s too late and the scammer has absconded with their funds.

So how does one not become a victim of this type of scam?

Relax, Ignore and Report

My main advice when I receive these types of inquiries from clients is to “Relax, Ignore and Report.”  The simple fact of the matter is that the IRS will not contact you via email, text or telephone in order to address a tax liability. They are also not prone to issuing threats in any form to taxpayers. In fact I am 100% sure that any initial contact from the IRS will be received via a letter.  We will discuss how to address letters received from the IRS later in this blog.

So what exactly is meant by “Relax, Ignore and Report”?  First, when the scammer contacts you he or she knows that the average taxpayer is terrified of owing the IRS.  They use this fear in order to convince their unsuspecting marks to pay non-existent tax debts.  My advice is to simply relax and end the phone call.  Do not under any circumstances engage with the scammers in any way.  HANG. UP. THE. PHONE!

The next thing you’re going to do is ignore these communications particularly when they arrive via email or text.  If you receive an email or a text you should delete it immediately without clicking on any links or downloading any attachments.  The attachments and links could contain viruses or other malware designed to access your personal information.

Finally, you should report the incident to the IRS.  Specifically, you should report your concerns to the Treasury Inspector General for Tax Administration.  They are the agency that is tasked with dealing with IRS impersonation scams.  Here is a link to their website:

What if I receive a letter?

As I mentioned before the scammers have gotten more advanced over the years. And in their efforts to “level up” they have begun to send letters in addition to texts, emails and telephone calls. The letters tend to be more of a rare occurrence but those that I have seen look pretty close to the real thing.  If you receive a letter that you think is from the IRS, please contact the IRS immediately. The IRS will be able to confirm for you whether they sent you a notice as well as the reasons for the notice. Under no circumstances should you assume that the letter is from a legitimate source unless you confirm directly with the IRS.

To give yourself added assurance you should contact your tax accountant and notify them of the incident. He or she can give you additional support for how to address these matters.  My firm offers consultations for tax related matters and can also assist you in figuring out how to address communications received from the IRS. Consultations can be scheduled via our

Hopefully you’ve gotten a lot out of our blog post.  Please share with your networks and on your social media feeds. Knowledge is power and if we all work together we can successfully put the scammers out of business.

If you have any comments or would like to contact us regarding this or any of our blog postings please feel free to send an email to

Melantha K. Paige, CPA | 01/25/2018


Ask The CPA: Is My Tax Preparer Legit?

Posted on June 8th, 2018

Well it’s that time of year again. The time of year where everyone is scurrying to have their taxes prepared. Tax season can be such a stressful time of the year. And I’m sure that you’re asking yourself the same questions as last year.  Do I have to file? Did I have enough withheld from my pay?  Will I owe AGAIN? Can I claim my schnauzer? And where exactly are those receipts??

But even the most organized, cool, calm and collected taxpayer has to decide the ultimate question… Who will prepare my taxes this year?  In this day and age there are so many options to consider. There’s do it yourself software, CPA’s, Enrolled Agents, tax lawyers, tax accountants, tax specialists and the list goes on and on.  I’m often asked by friends, family and social media followers what’s the best way to choose a tax professional.  Nowadays that’s a pretty loaded question.

You see the tax preparation industry is pretty easy to become a part of. This is mostly due to the lack of regulations imposed by our government on who can prepare tax returns for a fee. Pretty much if your fingerprints don’t indicate that you’re a felon and you’re up to date on your own tax filings you have the opportunity to receive a Preparer Tax ID Number (PTIN). A PTIN is an identification number which identifies you to the IRS as a paid preparer.

Due to the lack of regulations and the ease of entry into the industry there have been a rash of tax preparer fraud cases that have been prosecuted in recent years.  “In 2015, the Tax Division permanently shut down more than 35 fraudulent tax-return preparers located all over the United States.  The defendants in those cases spanned the spectrum from large-scale return preparation franchises to small, independent return preparers[1].”   Those prosecutions only represent a small fraction of bad actors as the IRS hasn’t been able to apprehend more due to a lack of resources and manpower. The number of people impacted by fraudulent tax preparers will continue to increase unless the IRS continues to step up its enforcement actions which is contingent upon receiving additional funding from Congress which isn’t likely to occur.

So in order to do my part to protect the public, I decided to put together a list of things to consider when assessing whether to hire or continue a business relationship with a tax return preparer.  I’m not saying that these methods are 100% full proof but knowledge is power and the more you know the safer you’ll be.

Rule #1:  Go with the Gold Standard

In a world where everyone and their grandmother is a “tax expert” it’s important to know that the person that you choose to trust with your most important personal information is not a criminal or some other bad guy.  This is why I always recommend going with the gold standard professionals. The gold standard professionals are the CPA’s, Enrolled Agents, Tax Attorney’s and other reputable tax professionals in your area. The gold standard professionals are a safe bet as they tend to have more education in matters related to tax, licenses in their field of expertise and requirements from State licensing boards to adhere to.  They also have to participate in continuing education which ensures that they’re up to date on the latest tax laws and other issues impacting the industry. The gold standard professionals tend to cost more but as with most things in life you get what you pay for. I like the idea of having peace of mind, don’t you?

Rule #2- Beware of False Prophets

I’m sure you’ve seen all sorts of tax season advertisements on social media, Craig’s list, your neighbor’s front yard, etc which guarantee tax payers a certain refund amount. This is a huge red flag.  There is no such thing as a guaranteed tax refund amount or a guaranteed refund PERIOD. The only thing that a reputable professional will guarantee is that your return will be completed accurately, timely and in accordance with the current tax laws. Tax preparers who guarantee refunds or refund amounts are committing tax fraud. They accomplish this by inflating or creating deductions and credits on your return.  And the funny thing is that when the IRS audits you, these people are long gone with your fees in tow. So be mindful!

Rule #3- Always Review Your Tax Return Before You Sign it or Allow it to Be e-filed

I hear a lot of horror stories from my social media followers about some of the things that happen in the big, bad, world of tax preparation. Examples include:  inflated deductions, omitted income, phantom deductions and dependents, etc. But you’d be surprised at how a lot of these issues could be avoided if tax payers simply reviewed their returns before signing or allowing them to be e-filed.  A gold standard professional will review your return with you as a part of their standard practice. However, the scam artists tend to keep your focus on the refund amount meanwhile not reviewing the forms which support the deductions and credits taken on the return.  And again, in the event of an audit the IRS is going to expect you to understand the contents of the return since you signed the return under something called “penalties of perjury.”  The definition of “penalties of perjury” is “A signed statement, sworn to be true by the signer that will make the signer guilty of the crime of perjury if the statement is shown to be materially false.” So you see, it’s up to you to ensure that you are aware of how your return was prepared and how your refund was calculated.

And last but not least be sure that your preparer has signed your return. Be wary of returns that state “self-prepared” vs the name of the person who prepared the return along with their PTIN.  A gold standard professional will always sign the return as a means of taking responsibility.

Rule #4- You Are Entitled to A Copy of Your Return (No Exceptions)

This might sound like common sense but as the old saying goes, common sense ain’t all too common.  You are entitled to a copy of your finalized tax return as well as your original source documents.  The tax preparer may have the right to withhold the return due to failure to pay however if your fees have been paid, the return should be provided to you along with your original source documents. The tax preparer never has the ability to withhold your source documents.  The scam artists will often withhold copies of the return so that you won’t see the actual refund amount or the deductions/credits which serve as the basis of the return. This will allow them to divert parts of your refund or otherwise disguise their fraudulent activities.  If your tax preparer refuses to provide you a copy of the return you can report them to the IRS. You can also request copies of completed returns from the IRS for a fee.

Rule #5- Your Fees Should Never Be Charged As a Percentage of Your Refund

Before you agree to sign on with a tax professional be sure to ask about fees!  Reputable preparers will always charge either based on time to complete, forms required, or a fixed fee. Please steer clear of individuals who charge as a percentage of your refund. This type of fee structure is not permitted by the IRS and is also indicative of a scheme to illegally inflate your refund in order to justify your fee.

I hope this mini-guide will help you as you navigate the murky world of tax season. Most tax return preparers are honest and provide great service to their clients; however, some preparers are dishonest. Report abusive tax preparers and suspected tax fraud to the IRS.

If you’re in the market for a new tax professional, are in need of tax and accounting services or have general comments on this blog topic that you’d like to share, please send us an email at:

[1] US Department of Justice Press Release dated March 31, 2016

Melantha K. Paige, CPA | 02/03/2017

Ask The CPA: 5 Facts About Business Formation That Could Destroy Your Business

Posted on June 8th, 2018

I’m often asked by entrepreneurs about the things that I’ve seen with small businesses that cause me to lose sleep at night. My answer is always the same: Business Formation Issues!  Business formation is the one area that many entrepreneurs know little to nothing about but could have a serious impact on the survival of their business. I decided to dedicate a blog posting to this topic in order to educate entrepreneurs in the hopes that they avoid the many potential pit falls associated with the formation of a business entity.

What exactly is business formation?

Business formation is the process of forming “a business entity that is administered as per corporate law in order to engage in business activities, charitable work, or other activities allowable. Most often, business entities are formed to sell a product or a service. There are many types of business entities defined in the legal systems of various countries. These include corporations, cooperatives, partnerships, sole traders, limited liability companies and other specifically permitted and labelled types of entities. The specific rules vary by country and by state or province”[1]. The primary reasons why business entities are formed is to limit personal liability and potentially save on income tax obligations.

There are many factors to consider before selecting an entity.  The process of selecting an entity is so important that the very survival of your business may be impacted if you don’t handle the process with the utmost of care.

Be sure to obtain the proper advice

The first pitfall that many entrepreneurs fall prey to is failure to obtain the proper advice before deciding to form an entity. There are so many providers online that offer entity formation services that it gives the average entrepreneur the false impression that entity formation is a simple process. The truth is that there is much more to selecting the proper entity beyond the preparation of the paper work.  You should always meet with an attorney, CPA or other qualified professional before attempting to navigate the process on your own. The advice that you receive on the front end can not only save you money but can also be instrumental in the survival of your business.

Research your options… Then research them again

Research shows that the fastest growing entity type in the United States is the Limited Liability Company.  LLCs are hybrid business entities which possess a unique combination of favorable legal, business and tax attributes that do not exist in any other single entity. Properly structured, LLCs provide the benefits of limited liability protection, operational flexibility, and pass through taxation without the restrictions generally applied to other entity types.

But did you know that there are other entities that you can choose from? Each entity has its advantages and disadvantages. As part of your research you should ensure that you’re choosing the best entity for your business type.  It is never a good idea to simply select an entity because it’s popular or easy to form. The entity types are:

  • Limited Liability Companies
  • C Corporations
  • S Corporations
  • Partnerships (General, Limited, Limited Liability)
  • Joint Venture/Cooperative

The entity you choose will also impact the way in which you can elect to be taxed at the federal level. In addition, the state where you choose to form your entity will dictate the types of tax filings required at the state level. So as you can see entity formation is no laughing matter.  In other words research, research, research!

Maintain a set of separate books and records

It is of utmost importance to maintain a set of separate books and records for your business.  A set of separate books and records will allow you to keep track of your business income and expenses. It will also provide financial reporting so that you can make decisions regarding your business. However, the most important thing to remember about maintaining a set of separate books and records is that it’s required by law.  In general, business owners are not permitted to commingle personal and business assets. If you commingle funds, you could lose the limited liability protection afforded by your business entity due to what is known as “piercing the corporate veil”. There are several factors that courts look at when deciding whether to pierce your company’s veil and hold you personally liable for company debts and lawsuits. One important factor is the presence of commingled funds. If you treat your business’s money the same as your own, then you risk the exposure of your personal assets.

Examples of commingling include:

  • using the same bank account for business and personal needs
  • Making withdrawals from your business checking account to pay personal expenses without documentation
  • Moving money back and forth between your business and personal accounts without documentation
  • Using a personal credit card for business expenses to get points

Establishing and maintaining your books and records is not that difficult. In fact there are many software options that will do most of the work for you assuming you avoid the behaviors noted above.  By having these simple procedures in place you will save yourself a headache at tax time, be in a position to evaluate the health of your business through timely and accurate reporting, reduce risk as well as be in a position to share your financial records with potential investors.

Hopefully you’ve gotten a lot out of our blog post.  Please share with your networks and on your social media feeds.

If you have any comments or would like to contact us regarding this or any of our blog postings please feel free to send an email to

Also, if you’d like to schedule a consultation to discuss your options for entity formation please feel free to visit our website at

Melantha K. Paige CPA, MBA
“The Finance Fixer”
CEO & Founder
Paige Consulting Services, LLC



Melantha K. Paige, CPA | 04/22/2018

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